Renewable Energy Sources

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Macroeconomic Benefits

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IRENA’s most recent analysis on the macroeconomic impacts of renewable energy features in the report Perspectives for the Energy Transition: Investment Needs for a Low-carbon Energy System” analysing the global macroeconomic impacts of decarbonising the global energy sector in line with the Paris Agreement by 2050 with a large focus on renewables and energy efficiency.

The results show that decarbonising the energy sector increases global GDP in 2050 by around 0.8% compared to the Reference Case.

That is the equivalent of almost 19 trillion USD in increased economic activity between today and 2050, similar to the combined market capitalization of all the companies listed in the New York Stock Exchange.

The increased economic growth is driven by the investment stimulus due to the capital-intensive nature of renewables and energy efficiency, and by enhanced pro-growth policies, in particular carbon pricing in which the income generated is fed back into the economy through lower income taxes, boosting consumption.

Improvements in welfare would go far beyond gains in GDP. IRENA analysis shows that the increase in welfare is close to 4%, compared to 0.8% improvement in GDP.

The savings in health and environmental externalities far offset the costs of the energy transition.

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Reducing global CO2 emissions in line with the Paris Agreement, through significant uptake of renewables and energy efficiency measures, would boost generate up to 26 million jobs in the global renewable energy sector by 2050. This figure compares to the 9.4 million jobs supported by the global RE industry today.

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Renewable energy development can drive economic growth, create new jobs and enhance human health and welfare at the national level. The Leveraging Local Capacity series examines the kinds of jobs created and suggests ways to build on existing industries.